CPI and PPI are huge this week. However, after Friday's employment number, the bar for economic reports has been raised.
This means that investors are that much more prone to nit picking at Wednesday's CPI than they would have been had the employment number not come in at more than double expectations.
At most, this is a short-term crosswind. I wouldn't dare to say its a headwind, at this point, due to the fact that the bids in the market remain constant.
Now let's say the CPI also blows away expectations, signaling that inflation is still going strong, while jobs growth is through the roof.
This brings back the 100 basis point rate hike demon that haunted the market for a few days in late July.
That'll be it, however. There is enough potential for inflation data mitigation, showing both inflation slowing and the economy not being as vibrant as the jobs report suggests that a selloff on investors being overly-sensitive about the CPI should be bought.
And this is the point I want to make tonight.
Investors are in their feelings. CPI has to be perfect. Otherwise, we selloff from Wednesday into Friday.
With the technical setup being as it is after today, the odds are 70/30 to possibly 80/20 in favor of further slippage after the data.
Here is the S&P 500:
By no means horrible. However, you can see that the S&P has decided to stop right at resistance, while it waits for a green light to move further up. Market shenanigans have to be expected in such a scenario according to the gospel of trading 2022's inflation driven, Fed obsessed, maniacal market.
A move to 4050 this week is a hand over fist buying opportunity. Everyone will be shorting or liquidating down there expecting sub-4000 to be imminent.
That's where we take on further aggressive risk in high growth, with a sprinkle of alt crypto names thrown in for good measure.
Give it time.
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